Which of the Following Are Generally True of All Bonds

question 56

Multiple Choice

Which of the following are generally true of all bonds?

• A) The longer a bond's maturity, the greater is the rate of return that occurs as a result of the increase in the interest rate.
• B) Even though a bond has a substantial initial interest rate, its return can turn out to be negative if interest rates rise.
• C) Prices and returns for short-term bonds are more volatile than those for longer term bonds.
• D) A fall in interest rates results in capital losses for bonds whose terms to maturity are longer than the holding period.

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Definitions:

Total Costs

The complete sum of all expenses, direct and indirect, incurred in the production of goods or services.

Average-Fixed-Cost Curve

A graph that shows the average fixed costs of production at different levels of output.

Fixed Cost

Costs that do not vary with the level of output or sales, such as rent, salaries, and insurance, remaining constant regardless of production volume.

Fixed Inputs

Resources used in production that don't change in quantity as the level of production increases or decreases.